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Are you guilty of trying to “keep up with the Joneses?" Avoid getting caught in the trap. If you're already in it, get out.

Tell me if you have seen a picture something like this before. Someone down the street just purchased a brand new expensive foreign sedan and a few days later, you see a major appliance delivery truck unloading a new living room suite along with the latest big screen HD television to that same family. You find out later that no one won the lottery, got a raise or promotion, or was left a significant inheritance.

You wonder, how are they going to pay for all that? You think they are living the high life.You feel like you are missing out on something or must have failed in life because you don’t possess the same materialistic things. Well, I will bet that if truth be told, the family down the street are barely making it.

Why do they do it? Some people need expensive items to feel good about themselves or prove that they have finally made it. Others just need to show off and fulfill a psychological need to be seen as better off than they really are, despite the costs.

Their attitude is that they want it now and will think about paying for it some time in the future.

Are you guilty of trying to “keep up with the Joneses?" Avoid getting caught in the trap. If you're already in it, get out.

Here are some things to help you avoid trying to “keep up with the Joneses” and eventually become the “Joneses”:

1) Pay off credit cards — We live in a disposable society and we want instant gratification. We see it now, we want it now, and so we put it on the credit card. Look at it this way, if you can afford to purchase something, why wouldn’t you simply pay cash for it? Why would anyone use a credit card instead, when they are going to be charged interest?

By using cash, one would avoid possible interest payments and the habit of using plastic. Pay off your highest interest rated credit card first and proceed to the next highest until you are finished paying them all off. In most cases, you really only need to keep two major credit cards at your disposal, so cut up the rest of them.

2) Push to save and invest more — With the grim outlook for the economy, spending money on status symbols just for the sake of showing off should be a thing of the past. If you are still driving a Hummer but have nothing in your retirement accounts or college funds set up for your children, you might want to evaluate your priorities.
Due to the recent recession, you should have at least 6 to 12 months of income saved in an emergency savings account.

Times are tough, but try to pay yourself first by saving at least 5 percent to 10 percent of your monthly income. If you spend more than what you earn, no matter what expensive possessions you have, your net worth is more than likely zero. Remember, it is not how much you make, but how much you save that counts.

3) Cut down your spending — You’ll be surprised at how much money you can save by monitoring your spending. Do you really need all 300 channels on the Dish Network or HDTV for more viewing clarity? Can you survive by selecting basic cable and saving a lot more money? Do you have to stop past Starbucks for your $5 morning coffee on your way to work? Have you considered brown-bagging your lunch a few days of the week? Is it possible to cook at home a bit more than dining out? Also, think about contacting your credit card company to see if they can lower your interest rate. Take some time to write out a daily budget and monitor your activities; you’ll be able to see where you can save some money. You just have to be disciplined!

Success in today’s world is all too often measured by the number of things you have and what kind of car you drive. The true measure of success is the size of your bank account and your net worth. Many people fail miserably, declare bankruptcy, and eventually live in poverty because they lived above their means in years prior. So, instead of trying to prove to people that you-got-it-going-on,” try paying off all of your credit card debt, increasing your savings and investments, and cutting down your monthly expenses on material things. And soon, people may be trying to keep up with you.

About the Author

James is a well-known financial advisor and educator in Philadelphia. For the past 12 years, his retirement presentations have been widely attended by retirees and those near retirement of the city of Philadelphia, government employees, school teachers, local companies, and those simply seeking ... More